05/02/2005 02:33 PM House FIN

SENATE JOINT RESOLUTION NO. 11                                                                                                
                                                                                                                                
     Urging the United States Congress to amend the tax code                                                                    
    to repeal the federal excise tax on communications.                                                                         
                                                                                                                                
DAVE  STANCLIFF, STAFF,  SENATOR  GENE THERRIAULT,  spoke  in                                                                   
support of the legislation                                                                                                      
                                                                                                                                
       This  resolution  encourages  Congress  to once  again                                                                   
       pass  a  provision  to repeal  the  "tax on  talking",                                                                   
       formally   known  as   the  federal  excise   tax  oil                                                                   
       communications.   This tax  was  originally  put  into                                                                   
       place  in 1898 to  help fund the Spanish  American War                                                                   
       under the guise of a temporary luxury tax.                                                                               
                                                                                                                                
       Since   that  time,   it  has  been  repealed   twice,                                                                   
       reenacted   in  1941,   adjusted  from  10%   in  1965                                                                   
       downward  to be phased  out at 1% per year,  reached a                                                                   
       low of                                                                                                                   
       1%  in 1981 and  then began  to rise and  climbed back                                                                   
       to  3%.  It  has  remained  at that  level  since  the                                                                   
       Revenue  Reconciliation Act of 1990.  In 2000 Congress                                                                   
       moved  to repeal  the tax  once and  for all;  however                                                                   
       President Bill Clinton vetoed the measure.                                                                               
                                                                                                                                
       Currently  more than 94 million households  pay the 3%                                                                   
       phone  tax.  It disproportionately  hurts seniors  and                                                                   
       others  on low  or fixed  incomes. It  affects 96%  of                                                                   
       the  households  using the  phone  lines for  Internet                                                                   
       service.  At a  time when  we are  trying to  increase                                                                   
       commerce this is a harmful tax.                                                                                          
                                                                                                                                
4:04:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Chenault  pointed out the zero fiscal  note and that                                                                   
Alaskan taxpayers pay $17 million to the tax.                                                                                   
                                                                                                                                
4:05:11 PM                                                                                                                    
                                                                                                                                
Representative  Holm asked  if  the state  of  Alaska pays  a                                                                   
federal excise  tax. Mr. Stancliff  explained that  the state                                                                   
of Alaska is exempted from the tax.                                                                                             
                                                                                                                                
Representative   Hawker   asked   the  consequence   of   the                                                                   
legislation.  Mr. Stancliff  responded  that  there would  be                                                                   
cuts  to  offset  the  revenue  or  new  sources  of  revenue                                                                   
discovered. Alaska does not benefit directly from the tax.                                                                      
                                                                                                                                
4:07:11 PM                                                                                                                    
                                                                                                                                
Representative Weyhrauch referred  to lines 11 - 13. He noted                                                                   
that  the  legislation  maintains that  the  tax  discourages                                                                   
expansion. Mr. Stancliff observed that the money does not go                                                                    
back into the expansion of the facilities.                                                                                      
                                                                                                                                
4:09:53 PM                                                                                                                    
                                                                                                                                
Representative  Foster   MOVED  to  report  SJR   11  out  of                                                                   
Committee  with  individual  recommendations   and  with  the                                                                   
accompanying fiscal  note. There  being NO OBJECTION,  it was                                                                   
so ordered.                                                                                                                     
                                                                                                                                
SJR 11 was REPORTED out of Committee with a "do pass"                                                                           
recommendation and with a zero fiscal impact note by the                                                                        
Department of Revenue.                                                                                                          
                                                                                                                                
4:10:37 PM                                                                                                                    
                                                                                                                                
At ease.                                                                                                                        
                                                                                                                                
5:15:29 PM